TaxTMI 
TaxTMI 
2024 (11) TMI 1523
X X X X Extracts X X X X
X X X X Extracts X X X X
....apportioned against un-launched area? 2. Whether on the facts and circumstances of the case and in law, the Ld. NFAC has erred in deleting the addition of Rs. 20,19,62,000/- made by the AO on account of disallowance of interest capitalization ignoring that the AO has categorically held that the assessee is following POCM method of accounting under which interest expenditure related to projects under construction can only be allowed on proportionate basis to the extent of revenue recognized and the interest of Rs. 20,19,62,000/- are in the nature of cost attributable to the acquisition/construction of asset, therefore, needs to be capitalized. 3. Whether on the facts and circumstances of the case and in law, the Ld. NFAC has erred in deleting the addition of Rs. 87,56,26,373/- made by the AO on account of disallowance of expenses related to exempted income u/s 14A r.w Rule 8D of the Act ignoring that the AO has categorically held that the assessee has made disallowance of expenses u/s 14A on estimate basis and no working has been submitted as per the provision of Rule 8D r.w.s 14A of the Act? 4. Whether the Ld. NFAC under the facts and circumstances of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uditor and Assessing Officer have ignored the total project area and apportioned the actual cost only on the launched project, which is not correct and the same means applying different standards and parameters on budgeted and actual cost for IDC in POCM working. Hence, according to me, the method followed by the Company i.e. charging actual IDC cost based on the total project area of Phase-Y and thereby apportioning and applying the same on the actual area launched is the correct method adopted by the company and hence the working of the Special Auditor and Assessing Officer is not correct and same cannot be applied while working out the revenue as per POCM. 9.9 I am therefore, of the considered view that Assessing Officer was not justified in replacing the figures of budgeted IDC and actual IDC cost incurred for recognizing revenue as per POCM Method taken by the appellant company in its working for recognizing revenue on the basis of POCM method. Hence, the addition of Rs. 76,51,08,140/- made by the ASSESSING OFFICER on the basis of apportionment of actual IDC cost only on the launched area: and ignoring the increased saleable area of the Magnolia and Belaire p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....07 have been reproduced by the ITAT in para 8 of its order dated 19-07-2023 (supra). The ITAT in its order dated 16.07.2023 upheld the order of CIT(A) deleting the disallowance made by the AO on account of capitalization of interest. The findings of CIT(A) for AY 2016- 17 deleting the said disallowance are reproduced below:- "8.4 I have considered the facts of the case, finding of the AO and submissions of the appellant. Having gone through the submissions of the appellant, the order of assessment passed by the Assessing Officer and the material evidences placed on the record, it emerges that the Assessing Officer made the national disallowance of the interest expenses of Rs. 51,53,80,000/- on account of capitalizing the same. This very issue has been examined by my predecessor in the A.Y. 2009-10. His details observations on the issue in consideration are reproduced ................. ................. 1.19 It is observed from the facts of the present case that the Assessing Officer has not identified any specific diversion of funds which were not used for the purposes of business. The funds borrowed from the banks and self-generated funds have e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nterest of Rs. 51,53,80,000/- on notional basis by the Assessing Officer based on various permutations was not justified and, accordingly, the addition made by the AO at Rs.51,53,80,000/- is not sustainable and it is hereby deleted.'' (emphasis supplied) 7.3.3 It is observed that the facts and circumstances with regard to capitalization of interest in this year are identical to the facts in the assessment year 2009-10 and subsequent assessment years. I have no reason to differ with the findings of my predecessors in the appellate orders for the earlier assessment years. Accordingly, I am of the considered view that capitalization of interest of Rs. 20,19,62,000/- on notional basis by the AO based on various permutations is not justified. The claim of interest by the appellant which is in accordance, with the provisions of section 36(1 )(iii) of the Act deserves to be allowed. Therefore, the addition of Rs. 20,19,62,000/- is not sustainable and hence the same is deleted." In view of the aforesaid finding, we find that Ld. CIT(A) has given a correct finding and as submitted by the Ld. AR for the assessee that the instant issue is squarely covered in favour of the asses....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aforesaid finding, we find that Ld. CIT(A) has given a correct finding and as submitted by the Ld. AR for the assessee that the instant issue is squarely covered in favour of the assessee vide ITAT order for AY 2010-11 to 2016-17 wherein the disallowance was deleted on the ground of non-recording of satisfaction in terms of section 14(2), hence, respectfully following the said precedent in assessee's own case, we uphold the action of the Ld. CIT(A) and reject the Ground No. 3 raised by the Revenue. iv) As regards deletion of addition on account of reclassification of Income from house property to income from business and profession made by the AO is concerned. Upon AO's addition, Ld. CIT(A) deleted the addition by concluding as under:- "9.3.1 The issue regarding classification of income under the head 'income from house property' or 'income from business and profession' came up before the appellate authorities in respect of 'DLF Centre' belonging to DLF Universal Limited in the assessment year 1996-97. This property was also held by the company as stockin-trade. The ITAT, Delhi, while discussing other addition of depreciation in respect of 'DLF Centre', confirmed the st....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 9.3.2 It may be mentioned here that the. appeals filed by the Revenue for A.Y. 1996-97 and 1997-98 were dismissed by Hon'ble Delhi High Court vide its order dated 05.09.2017 in ITA No.408/2008 and 18.05.2017 in ITA No. 407/2009. The AO has observed that the Hon'ble ITAT in the above referred case for A.Y. 1996-97 did not deal with the issue of reclassification of income from properties. This observation of the AO, in the light of facts stated above, is factually incorrect. Applying the same ratio as that of 'DLF Centre' which was also held as stock-in-trade, the other properties held as stock-in-trade from which rental income is being derived are to be assessed under the head Income from house property'. In the assessment years 2016- 17 also, the same issue was decided in favor of the appellant in its own case by CIT(A)-34, Delhi, vide his order dated 30.04.2019 in appeal no. 186/18-19. The observations of CIT(A) are reproduced below:- "11.4 I have considered the facts of the case, finding of the AO and submission of the appellant. It is noted that the Assessing Officer has made the addition of Rs.24,34,94,843/- by treating part of the rental income from the property s....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Hon'ble Kolkata High Court in the case of Azimganj Estate Pvt. Ltd. vs. CIT [2013] 352 ITR 82 (Cal):- Income from house property-lncome from business - Construction Business- Rental Income from unsold Flats- Assessable as Income from house Property- Income Tax Act- ss, 14, 22. The facts ofAheJ0ove cited judicial pronouncements are identical with the facts of appellant's case, therefore, ratio of the said judgment is squarely applicable in the facts of the appellant's case. Hence, the addition made on account of disallowance on deduction under section 24(a) of the IT Act u/as not justified and same is deleted." 11.5 It is noted that the facts and circumstances of the present case, in this year, are similar and identical to the facts in the preceding years. Accordingly, I tend to follow the detailed reasoning given by my predecessor in the appellate order for the A.Y. 2009-10. Accordingly, the addition made by the Assessing Officer at Rs.24,34,94,843/- on account of reclassification of "income from the house property" to "business income" is not sustainable and it is hereby deleted. While disposing of the appeal, CIT(A), in para 11.4, of his order also....
X X X X Extracts X X X X
X X X X Extracts X X X X
....use of helicopter and aircraft expenses treating them as hot incurred wholly & exclusively for business purpose. Ld. CIT(A) taking into account the nature of business activity of the assessee considered the observations of Ld. AO not sustainable and further holding that if any expenditure is identified as personal expenditure incurred on the directors and other employees it would fall within the meaning perquisite and is taxed accordingly. In asssessee's own case for A. Y. 2010-11 (supra) the issue has been considered and decided in favour of the assessee.....This has been followed subsequently in assesssee's own case for A.Y. 2010-11 and 2011-12(supra). In the light of aforesaid, following aforesaid, the ground has no substance, the same is decided against the Revenue." 10.3.4 The facts of this year in respect of this addition are exactly similar to the facts in the earlier years where the addition made by the AO has been deleted by the CIT(A) and ITAT. Therefore, in the assessment year 2017-18 also, similar addition of Rs. 3,98,74,706/- made by the AO on estimated basis following earlier years orders, which have not stood the test of appeal, is not sustainable and hence ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....osing balance as per the party (Rs.) Difference as per assessment order (Rs.) Balaji Mariline Pvt. Ltd. 1,73,954/- 10,05,768/- 23,26,646/- Le Millennia Supermart LLP 12,34,556/- Nil 12,34,556/- Aecom India Private Limited 17,34,64,985/- 17,78,77,535/- 44,12,550/- Total 79,73,752/- Therefore, total addition of Rs. 95,22,720/- (i.e. Rs. 15,48,968/- plus Rs. 79,73,752/-) was made by the AO on account of alleged unverified/ unreconciled ledger balances. 9. Upon assessee's appeal, Ld. CIT(A) granted a very small relief by holding as under:- "11.3 I have carefully considered the findings of the AO, submissions made by the appellant and have perused the material on record. As regards the alleged unverified purchases aggregating to Rs. 15,48,968 in respect of M/s A&S Printographics Pvt. Ltd and Kapil Bhukar, who did not reply to the notices u/s 133(6) issued to them by the AO, it is seen that the appellant did not make any effort to prove the genuineness of purchases from these parties, when the AO had raised doubts in this regard in view of non-compliance of notices u/s 133(6) by these parties. The appellant c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt was asked to file the reconciliation of the accounts of, inter-alia, the above mentioned three parties. The statement of account submitted to the AO by Balaji Mariline Private Limited was also enclosed with this notice and is available at page no. 472 of a paper book filed by the appellant. Therefore, it cannot be said that proper opportunity to file reconciliation in respect of these parties was not given by the AO. In these circumstances, I am of the considered view that the addition to the extent of Rs. 64,78,920/- (Rs. 79,73,752 - Rs. 14,94,832) in respect of unreconciled purchases is upheld. 11.3.3 In view of the above discussions, the addition to the extent of Rs. 14,94,832 is deleted and the balance addition of Rs. 80,27,888/- (Rs. 95,22,720- Rs.14,94,832) made by the AO in respect of unverified/unreconciled transactions is upheld." 10. Against the above action of the Ld. CIT(A), assessee is in appeal before us. 11. We have heard both the parties and perused the records. 12. At the time of hearing, Ld. AR for the assessee pleaded that if the parties do not respond to notice issued u/s 133(6) of the Act, assessee cannot be held responsible for it. He furt....